Charlemagne

SimEurope

Some fantasies for the future of Europe may cause more problems than they resolve

ANYBODY who has played (or watched their children play) life-simulation computer games, such as “SimCity” or “The Sims”, will know how engrossing they can be. Countless hours are spent creating an intricate synthetic world, be it a house or a whole city, inventing characters that speak a nonsense tongue known as Simlish, controlling their actions and sometimes visiting disaster upon them. A similar craze is gripping Brussels: call it SimEurope.

Guido Westerwelle and Radek Sikorski, the foreign ministers of Germany and Poland, have spent much of this year locked away with nine colleagues (almost all boys) engaging in make-believe. This week they revealed the fruits of their “Future of Europe Group”. It is a world that includes an elected European president, a more powerful European foreign minister, a European border police and perhaps even a European army. The British spoilsports were not invited.

Just a few days earlier, José Manuel Barroso, president of the European Commission, gave his annual “State of the Union” address and spoke of a future “federation of nation-states”, a notion he has repeated in countless op-ed articles since. Mr Barroso has thus revived the term coined by his predecessor, Jacques Delors, but has not explained what he means by it. He says only that he will present some proposals by 2014.

With his words, Mr Barroso is breaking away from the three other “presidents”—Herman Van Rompuy of the European Council, Mario Draghi of the European Central Bank and Jean-Claude Juncker of the Eurogroup of finance ministers—who are collectively planning a “genuine” economic and monetary union. Having set out the “building blocks” in June, Mr Van Rompuy has now produced an “issues paper” that proposes, among other things, a central euro-zone budget. An interim report may be presented at a summit in October and the final version should be out in December.

In many ways Angela Merkel, the German chancellor, started this craze for make-believe with her calls for a “political union” (including more power for the flawed European Parliament). This is awkward in France, where parties have been deeply divided over Europe since the referendum in 1992 for the Maastricht treaty (approved narrowly) and the one in 2005 for a constitutional treaty (rejected). Yet Pierre Moscovici, the Socialist finance minister, recently uttered the word “federalism”. And François Fillon, the recent conservative prime minister, has proposed a new “pact for Europe” that would include a European finance minister.

All these ideas have their origins in an old game: More Europe. The aim is to avoid cataclysmic war, or domination by one country, by uniting while still pursuing national advantage. Each level of integration becomes more difficult as problems deepen. Players must not only negotiate away more power, but must then sell the new treaties to their reluctant populations.

In SimEurope the people are synthetic, divided into good Europeans and bad nationalists or populists. The baddies can be defeated by More Europe. In the real world things are rather more complicated. There is growing scepticism about the European project. According to recent polls, a majority of Germans think they would be better off without the euro, and many would be rid of the EU too. In France a majority of those who voted for the Maastricht treaty would not do so again. In Spain, though, a majority wants to deepen euro-zone integration.

Eurosceptic and Europhobic parties are claiming substantial chunks of electorates. In the Dutch elections this month centrists may have made a comeback, but often by adopting a tough line on bail-outs for troubled countries. In many places, there is a growing cry for citizens to be consulted directly in a referendum, albeit for different reasons. In Britain, Eurosceptics hope to win a vote to leave the EU whereas in Germany the pro-EU elite wants a referendum to change the constitution to give more powers to Brussels.

Back to reality

By turning an imaginary currency into reality, Europe’s leaders have created a real-world crisis that they must deal with. Returning to the old marks, francs and lire would be more painful than trying to fix the euro. That means some more integration, and giving up the studied ambiguity about the ultimate objective of Europe so that citizens can make a clear choice.

Leaders are at least discussing the right issues. But the problem with many recent ideas is that they obfuscate the essential questions more than they clarify them. Foreign ministers may like the idea of playing with a European army, but it is hardly central to resolving the economic crisis. Similarly Mr Barroso’s federation of nation-states misses the point. He raises the standard of federalism, which is inevitably contentious, without saying how integration is to be reconciled with the nation-state rump that is left.

The euro zone is heading towards the worst of both worlds—nation-states feel violated by Brussels’s ever-expanding controls, even as the European level remains too weak and opaque to have an impact or win popular allegiance. A better approach might be to set aside labels and think of a narrow set of core functions that need to be deeply integrated. A coherent banking union makes sense, as do some joint bonds. Germany rejects mutualisation of debt on the grounds that not even America expects states to guarantee each other’s debt. Yet America has federal bonds, backed by federal taxes, which in turn provide a safe asset for all banks to hold. American states go bankrupt, as do lots of banks. Call it what you want; integration, centralisation, federation, confederation—the objective should be to stabilise the system sufficiently to allow badly managed banks and states to go bust safely.